2016 (1) TMI 528 - AT - Income Tax

Penalty u/s 271(1)(c) - concealment on account of investment - Held that - It is an undisputed fact that the evidence in the form of sale deed was found during the course of survey showing the assessee paid sale consideration of ₹ 4.00 lacs for purchase of plot which was not found recorded in the books of account and source of investment has not been explained by the assessee which was admitted by the assessee during the course of survey but the same has not been disclosed in the return. The concealment on account of investment has been established by the AO. The assessee also partly admitted that Coordinate Bench has not accepted the theory of set off of this addition against trading addition in quantum proceedings. Similarly, the cash deposit in the bank account is also proved by the AO as concealment of income of the assessee. The explanation filed by the assessee is not bonafide and this case is covered u/s 271(1)(c) of the Act. Thus in view of the above judgement of Hon ble Supreme Court CIT vs. Mac Data (P) Ltd. (2013 (11) TMI 14 - SUPREME COURT ) wherein held AO has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the Assessing Officer is not required to record his satisfaction in a particular manner or reduce it into writing we confirm the order of the ld. CIT(A). Therefore, the appeal of the assessee is dismissed. - Decided against assessee

Summary

Issues Involved:
1. Confirmation of penalty under Section 271(1)(c) of the Income Tax Act.
2. Addition on account of undisclosed investment in a plot.
3. Addition on account of unexplained cash deposits in the bank.

Issue-wise Detailed Analysis:

1. Confirmation of Penalty under Section 271(1)(c) of the Income Tax Act:
The primary issue revolves around the confirmation of the penalty of Rs. 1.84 lacs levied under Section 271(1)(c) of the Income Tax Act. The penalty was imposed for concealment of particulars of income and furnishing inaccurate particulars of income. The Assessing Officer (AO) initiated penalty proceedings after confirming additions on two accounts: undisclosed investment in a plot and unexplained cash deposits in the bank. The AO provided reasonable opportunity for the assessee to be heard, which was availed by the assessee. The AO concluded that the assessee had not disclosed income in the return filed for the relevant period, thus invoking the provisions of Section 271(1)(c).

2. Addition on Account of Undisclosed Investment in a Plot:
During a survey conducted under Section 133A at the business premises of the assessee, a purchase deed dated 26-12-2005 was found, indicating that the assessee purchased a plot for Rs. 4.00 lacs. The assessee admitted this as undisclosed income during the survey but did not reflect it in the return of income. The AO treated the entire amount as undisclosed income and added it to the taxable income. Both the CIT(A) and ITAT confirmed this addition. The assessee argued that the plot was gifted by the father and the sale was shown on paper due to family compulsions. However, this explanation was rejected by the appellate authorities. The CIT(A) observed that the affidavit provided by the assessee's father was contradictory to the registered sale deed and lacked supporting evidence. The conduct of the assessee indicated deliberate and willful filing of inaccurate particulars of income.

3. Addition on Account of Unexplained Cash Deposits in the Bank:
The AO found that cash deposits amounting to Rs. 2.40 lacs in the bank account were not recorded in the regular books of account. The assessee admitted this during the survey but did not disclose it in the return of income. The AO treated the entire amount as unexplained deposits under Section 69 of the Act and added it to the taxable income. Both the CIT(A) and ITAT confirmed this addition. The assessee argued that the unexplained bank deposits were covered by trading addition/surrender of income, but this was not accepted. The CIT(A) noted that no explanation was provided during the appeal proceedings to explain the cash deposits, and the argument that the accountant made a mistake was not substantiated.

Conclusion:
The ITAT upheld the penalty imposed under Section 271(1)(c) of the Act, confirming the findings of the AO and CIT(A). The Tribunal noted that the evidence in the form of a sale deed and unexplained cash deposits were concrete and found during the survey. The assessee's explanations were not considered bona fide, and the penalty was deemed applicable. The appeal of the assessee was dismissed, and the penalty of Rs. 1.84 lacs was confirmed. The Tribunal relied on the Supreme Court judgment in the case of CIT vs. Mac Data (P) Ltd., emphasizing that the AO is not required to record satisfaction in a particular manner during assessment proceedings for initiating penalty proceedings.